The EIU view

Another terrorist attack by the Somalia-based Islamist group, al-Shabab, at a luxury hotel in Nairobi, killing 15 people, is expected to heighten security risk. Although the second and final five-year term of the president, Uhuru Kenyatta, is likely to herald a period of political stability, failure to tackle insecurity will weigh on the economy and could erode support for the current administration in the medium term. Real GDP growth will remain healthy, barring shocks.

Somalia/Kenya: Maritime dispute escalates
We do not expect the dispute to result in an early withdrawal of Kenyan troops engaged in military intervention in Somalia as part of the African Union Mission to Somalia.

Terrorist attack in Nairobi
The attack, claimed by al-Shabab, left 14 people dead, excluding the attackers. It may prompt a rethink of Kenya's ongoing military involvement in southern Somalia.

Budget deficit revised upwards
Fiscal consolidation is advancing, but at a slightly slower pace than expected. Provided that the budget deficit and growth targets are hit, public debt will continue declining.

New power tariff structure introduced
The new tariffs came into effect on August 1st. Middle-class consumers are likely to be hit hard by power price rises, and criticism of Kenya Power is set to persist.